China Three Years Late on Installing Offshore Wind Farms

BEIJING --
China is three years behind schedule on a plan that would make it the world’s biggest market for offshore wind, a setback for the $15 billion industry that’s seeking to produce affordable electricity from the one of nature’s most reliable energy sources.

China set out an ambitious plan in 2011 to build 5,000 megawatts of offshore wind turbines in four years, enough to power 5.4 million homes. With less than 10 percent of that capacity in place, officials now say they won’t meet that goal.

Strong, steady offshore breezes have the potential to become an important source of electricity, but installing jumbo- jet sized gear in the harsh, marine environment is a complicated and expensive endeavor. The slow pace in China is matched by the U.S., which has no offshore wind farms after more than a decade of development efforts. In Europe, the only continent with any significant sea-based wind power, companies have scrapped plans for more than 5,700 megawatts since November.

China is “more cautious” on offshore wind than it was on solar and onshore wind because “it’s more risky and costly,” said Shi Pengfei, honorary chairman of the Chinese Wind Energy Association.

The target for offshore wind “definitely can’t be attained,” said Li Junfeng, director general of the National Center for Climate Change Strategy and International Cooperation. That’s a rare public admission from the government agency responsible for studying climate-change policy.

Turbine Makers

German power-equipment maker Siemens AG, along with Chinese competitors Xinjiang Goldwind Science & Technology Co. and Sinovel Wind Group Co., have the most at stake since they’re the top turbine suppliers for China’s offshore projects.

There was 429 megawatts of offshore wind power operating in China at the end of 2013. The country may install about 500 megawatts of offshore capacity next year and 1,000 megawatts in 2016, according to Bloomberg New Energy Finance.

Worldwide, about 2,570 megawatts are expected to be installed this year, worth about $15 billion. That total may grow to 7,560 megawatts in 2020, according to the London-based researcher.

“Offshore wind is at the testing stage and development won’t be too fast,” said Gao Hongbiao, deputy general manager of Jiangsu Longyuan Offshore Wind Power Co., a unit of one of the four biggest Chinese utilities commissioning wind projects.

Onshore Wind

Offshore turbines are insignificant when compared to China’s onshore wind capacity of 77 gigawatts. That’s the most in the world, and the government has plans to install an additional 18 gigawatts this year, according to the National Energy Administration. The cost of power from land-based wind rivals that of coal or natural-gas fired plants.

China is moving slowly with offshore wind after its onshore wind industry expanded so quickly that the rest of the country’s energy infrastructure couldn’t keep up. As much as 12 percent of its onshore wind turbines weren’t connected to the grid in 2013. Another 11 percent of the turbines had grid connections and were idled because transmission lines couldn’t handle all the output producing.

“China learned from experience on onshore projects when setting offshore policies,” said Tang Wenqian, executive vice secretary-general of the Chinese Renewable Energy Industries Association, an organization that acts as a conduit between government policy makers and industry executives.

‘Well Behind’

What’s happening in China is mirrored in other regions, said Steve Sawyer, secretary-general of the Global Wind Energy Council.

Progress in the industry “is well behind most projections that have been made,” he said in an e-mail.

In the U.S., Cape Wind Associates LLP has been planning what may be the country’s first offshore wind farm for more than a decade, in Nantucket Sound, off Massachusetts. It’s faced stiff opposition from fisherman, American Indian groups and local residents including both the Koch and Kennedy families.

A handful of other companies are also developing Atlantic Coast wind farms. The U.S. Interior Department has awarded five leases from Massachusetts to Virginia and is planning to auction more offshore sites this year.

Europe is the most advanced market for offshore wind, with about 7.3 gigawatts in operation, and 4.9 gigawatts under construction, according to the European Wind Energy Association.

Unexploded Mines

Even there, environmental concerns and risks including unexploded World War II-era undersea mines are driving up the cost of what’s already a costly source of power. Developers have canceled plans to build more than 5,700 megawatts of additional capacity since November.

Offshore wind is among the most expensive renewable energy technologies working at utility scale. Towers as tall as 40- story buildings must be anchored to the seabed, holding blades as long as the wingspan on the biggest commercial jetliners. The units must withstand storms that buffet the coast, including typhoons that hit China in the summer.

The cost of offshore turbines is surpassed only by solar- thermal systems, which use the sun’s energy to heat fluids, and by more experimental equipment that produces electricity from the motion of waves and tides, according to data compiled by Bloomberg.

The price China is offering for offshore wind power is the lowest among nations that have publicly set out goals for developing the industry.

Offshore Rates

It set incentive rates of 750 yuan a megawatt-hour for projects in inter-tidal areas, waters up to five meters deep, and 850 yuan for turbines in water deeper than that. That comes out to about 89 euros ($121) and 101 euros, compared with 255 euros for offshore wind in Japan, about 150 euros in the U.K. and 124 euros in Germany.

The prices set for offshore wind power are “quite conservative,” said Tang of the renewable energy lobby group.

Even so, China’s rates may be enough to attract some developers. Rates of return for the projects may be as much as 8.2 and 10.3 percent, according to Bloomberg New Energy Finance estimates.

“We can still make money at the new rate,” said Lan Peizhen, investor relations manager at China Longyuan Power Group Corp., the nation’s biggest developer of onshore and offshore wind farms. The company currently operates 250 megawatts of inter-tidal projects. It’s building a 100-megawatt inter-tidal project in the eastern province of Jiangsu and a 400-megawatt sea-based project in Fujian.

Bigger Turbines

Goldwind “will gradually develop offshore turbines with bigger capacity as well as higher reliability and power generation,” the company said in an e-mailed response to questions.

“Offshore wind is the main battlefield of displaying Sinovel Wind’s skill to the full,” Sinovel’s media manager, Bao Zhen, said in an e-mailed response to questions. Cordula Ressing, a spokeswoman for Siemens, declined to comment when contacted by phone and e-mail.

The government in Beijing may have to issue a general plan for ocean uses before pressing the industry to expand more quickly, said Wang Zhongying, deputy head of the Energy Research Institute at National Development and Reform Commission, a state-level organization that studies energy policies. “It’s hard to see a rapid development in offshore wind power,” Wang said.

1 Comments

Excellent article. Yes. Having succeeded in achieving top position in onshore wind in the world, it may be no wonder china repeats the same in offshore wind.
It's reported that China’s total wind turbine installed capacity will hit 100 million KW by 2015, including 5 million KW on offshore. Wind power has become the third largest electric power in China. China is determined to promote the revolution of energy generation and consumption, to control the total consumption of energy, to improve energy conservation, and to support the development of energy conservation and low carbon industry as well as renewable energy in order to ensure the national energy safety.
“The UK’s world leadership position in offshore wind could be critical in helping China overcome a number of key barriers to developing its vast offshore wind resource. According to a series of new reports by the Carbon Trust the UK, with more than a decade of experience in offshore wind deployment, can play a key role in helping China develop its offshore wind potential.
China has set a number of targets in relation to offshore wind including a deployment target of 5 GW of offshore wind by 2015 and 30 GW by 2030. At present some 1GW of near shore projects are under development but are facing a number of technical and commercial barriers in moving forward at the rate required to meet the Government targets. Barriers include uncertainty over an effective and efficient long-term pricing policy that is needed by project developers while ensuring consumers are protected from high costs, a slow consenting regime and the lack of a focussed innovation programme to drive costs out of the deployment process.
Commenting on the report Al-Karim Govindji, of the Carbon Trust said:
“China’s offshore wind resource is significant and will be critical for the country to help meet its rising energy demand through developing low carbon energy sources. The UK has an important role in offering its experience and learning to ensure that China’s vast resource is efficiently exploited. Innovation across a number of areas will be essential to ensure targets are met and to drive cost reduction across the whole sector.”
The new research proposes a number of policy instruments, developed to accelerate the roll out of offshore wind in the UK, be applied to China to speed up their offshore programme and help ensure government targets are met in a cost effective way. The research was undertaken working closely with the wind industry in China and involved participation of over 20 Chinese companies and undertaking two workshops in Beijing.
The new research concluded that China should consider:
• Developing an effective publicly funded research and demonstration programme to commercialise new cost reducing innovations.
• Developing an offshore wind capital grants scheme to improve the government’s awareness of the commercial realities of developing offshore wind in Chinese waters and support R&D and technology testing
• Developing an effective on-going price support mechanism to balance developer incentives with government costs to ensure value for money for electricity consumers and tax payers.
Developing an effective zoning policy to accelerate planning by relaxing constraints in identified development zones;”( Innovation essential for China to hit ambitious national offshore wind deployment targets, PRESS 30 MAY 2014,CARBON TRUST).
China’s energy demand continues to grow rapidly, most of it met by coal (70%) and oil (19%). Electricity supply is dominated by coal, though hydro already makes an important contribution. However, the government has committed to reduce energy intensity and increase use of renewables. To date, China has focussed on driving the development of onshore wind as a key contributor to its renewables targets, with total capacity at 75GW, a CAGR growth of 69% from 2001 to 2012. However, the challenge of connecting a lot of this capacity to the energy hungry eastern coastal regions as well as a desire to diversify energy sources has led to an increasing focus on offshore wind as a potential new source of renewable energy close to the demand. Indeed, the government has set ambitious targets of 5GW of installed offshore wind capacity by 2015 and 30GW by 2020 that would eclipse capacity in other countries. However, China faces numerous challenges to the development of the offshore wind industry,
The main projects
The Donghai Bridge Wind Farm in Shanghai is currently the most high profile offshore wind project in China. It was completed in time for the World Expo being held in Shanghai in 2010. It is made up of 34 turbines with a combined installed capacity of 102MW.
The province of Tinajin is constructing the Bohai Bay wind farm which, once completed in 2020, will be the world's largest offshore wind farm with an installed capacity of 1,000MW. By way of comparison, Europe's largest existing offshore wind farm is 300MW.
The Chinese government has identified six locations which are suited to offshore wind power and is preparing offshore wind development plans. The most advanced is Jiangsu which is in the process of tendering four new offshore developments each with a capacity of 200MW.
The main players
Five state-owned power generators dominate the offshore wind power market:
• China Guodian;
• China Huaneng Group;
• China Datang Corporation;
• China Huadian Corporation;
• China Power Investment Corporation.
Dr.A.Jagadeesh Nellore(AP),India
Wind Energy Expert
E-mail: anumakonda.jagadeesh@gmail.com